Interference in the labour market Minimum Wage A minimum amount per hour which most workers are entitled to be paid. U.S. minimum wage is 15,000 USD /year Ghana minimum wage is 689 USD/year Reasons for Minimum Wages Increases the standard of living for the poorest and most vulnerable people in society. Hopefully this would reduce poverty. Reasons for Minimum Wages Stimulates consumption by putting more money into the hands of people who quickly spend their entire paycheck. The Effects of Minimum Wage Legislation This can be illustrated using supply and demand . Reasons Against Minimum Wages Some people are willing to work for less, yet employers cannot hire them at that wage rate. Reduces the quantity of workers demanded. May cause price inflation. Do minimum wages cause job losses? Answer this correctly and you can skip the remaining economics classes for the year. How does the elasticity of demand affect your answer? What if the minimum wage is the same as the equilibrium wage? What about the studies in your book? Trade Unions These are organisations that exist to protect the interests of workers. Remember the voice of all is stronger than the voice of one. Trade Unions They negotiate pay and working conditions. They provide legal protection. They can put pressure on governments. Trade Unions A strong trade union can force wage rates to go up in some labour markets. This wage rate may be above the equilibrium price for that kind of labour. This is not market efficiency at its best. Trade Unions How would you feel about a strong trade union if you were an employee of a business? How would you feel if you were the owner of the business? Factors To Consider Elasticity of demand for labour. Machines do not go on strike. Machines do not need dental insurance. Does the employer need to hire only union employees? Does the employee need to be a member of the union?